Now that the requirement for obtaining a mortgage are tighter than ever before, it’s vital that you have a good credit score. You can repair your credit after making some financial missteps, but the best thing to do is to keep your credit in good shape from the word go. If you are a new credit account holder or already have along credit history, there are some things which can help you to maintain; or restore good credit.
One important thing to keep in mind is that your payment history makes up about 35% of your credit score. Your credit report lists the last seven years of activity, but it is the last 2 years which matters the most when a lender is trying to determine your credit worthiness. How late your payments are also factors in. While a payment which is 30 days overdue is one thing and is seen as relatively minor, payments delinquent for more than 90 days are a serious problem. Remember, it’s easier to keep your credit in good shape than it is to repair it.
One good way to build your credit score is to have a mix of different accounts. Having a credit card which is paid off monthly in full, an installment loan (a car loan, for instance) and ideally also a mortgage is a good way to demonstrate to creditors that you can manage multiple accounts responsibly and are therefore a low risk.
Never apply for credit which you do not need. Having too many accounts or making too many applications can negatively impact your credit score. You may also be tempted to use these accounts and get yourself into trouble. Try to avoid the need for credit restoration by only having accounts you actually need.
Have a look at your credit report and check it to be sure that everything there is accurate ? this is a good beginning to any credit restoration plan. If the credit bureau can’t prove that an account is yours, you can have it taken off of your report. If you see small debts which you can afford to repay, pay these off.
If you have some larger accounts which need to be paid off, get in touch with the creditor and offer a settlement. Your creditor may be willing to reduce your debt if you are willing to work with them to repay it. While a settlement is still a mark on your credit report, it is a lot better than an outstanding debt.
Even with the best of intentions, things will happen from time to time. For reasons entirely beyond your control, you can find your credit rating taking a hit. However, don’t let this discourage you. Credit restoration can get you back on track. Stay determined and you’ll be able to reestablish good credit once again.